Bloomberg
June 9, 2011
Greek bonds fell for a third day, pushing the yield above 25 percent for the first time since June 1, as Europe’s policy makers clashed over how to fix the nation’s debt crisis.
Portuguese and Irish bonds also dropped. German two-year note yields were within five basis points of a 10-day high amid speculation the European Central Bank will today signal its intention to raise interest rates next month. The ECB is forecast to leave its benchmark rate at 1.25 percent, according to a Bloomberg survey. ECB President Jean-Claude Trichet will hold a press conference at 2:30 p.m. in Frankfurt. Greek gross domestic product contracted 5.5 percent in the first quarter, data showed.
“There seems to be a lot of gloomier news about the Greek rescue package, it’s sentiment rather than anything else, and we’ve also had disappointing GDP numbers,” said Orlando Green, a fixed income strategist at Credit Agricole SA in London. “We think the ECB will flag a July rate hike. That will give bunds a bit of a knock, especially the front end of the curve.”
Greece’s two-year note yield climbed 169 basis points to 25.62 percent as of 12:13 p.m. in London. The 4.6 percent security due May 2013 fell 1.81, or 18.10 euros per 1,000-euro ($1,460) face amount, to 70.76. Ten-year yields gained 46 basis points to 16.60 percent.
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